UK overhauls home-building rules in bid to boost productivity

LONDON, July 9 (Reuters) - Britain's government said on
Friday it would remove obstacles to building new houses as it
tries to tackle a chronic shortage of homes and put its economy
on a sounder footing.

At the centre of a new programme to boost Britain's poor
productivity record are powers for the government to step in and
draw up housing plans if local authorities fail to do so.

Town halls that drag their feet on planning decisions may be
fined, the government said as it moved to reduce the delays for
housing projects that are often caused by local objections.

The plan follows the first government budget since Prime
Minister David Cameron's Conservative Party won national
elections in May.

Britain's economy has grown strongly over the past two years
and the number of people in work has hit a record high. But
growth in output per worker lags behind that in many other
advanced countries, posing a threat to the recovery.

"In stark terms, it now takes a worker in the UK five days
to produce what his or her counterparts in Germany can deliver
in four," business minister Sajid Javid said.

The new plan brings together existing proposals in areas
including transport, trade and the devolution of power to cities
and regions. It also focuses on training which critics say lags
far behind other European countries.

Javid said it was unacceptable that Britain was one of few
advanced countries where the skills of 16- to 24-year-olds were
no better than those of 55- to 64-year-olds. Finance minister
George Osborne said that in the last 25 years, France had built
more than 2,500 miles (4,000 km) of motorway while Britain had
built just 300.

But the housing rule changes are the programme's
centrepiece. British house prices have surged in the last two
years to record highs, pushed up in part by government measures
to make it easier for people to get mortgages.

The government hopes that a nimbler land and housing market
will make it easier for people to own homes close to their work
and give firms more freedom of location.

BROWNFIELD PUSH

Planning permission will be granted automatically for
housing developments on suitable brownfield sites, land formerly
used for industrial or commercial purposes.

"That has really been an ongoing problem for many years in
the UK for the housebuilding side but also for new business,"
said John Van Reenen, director of the Centre for Economic
Performance at the London School of Economics.

The plan was also welcomed by some investors.

"We all know that the UK needs to build masses more homes
but for years all we've had is policies to help ever increasing
numbers of people to buy too few properties," Andrew Allen, head
of global property strategy at Aberdeen Asset Management.

"There's plenty of money from investors waiting in the wings
to invest and indeed fund the much-needed residential schemes."

John Hawksworth, chief economist at PwC, said the government
should rethink its reluctance to borrow to fund investment and
take advantage of rock-bottom borrowing costs to radically
improve housing and transport infrastructure.

"The government could be bolder in this area," he said.

The government said it had hired former Bank of England
deputy governor Charles Bean to lead a review of British
statistics so productivity can be measured more accurately.
(Writing by William Schomberg; Additional reporting by Andy
Bruce; Editing by Ruth Pitchford)